Maxime Bayen discusses startup funding in Africa: “Startups should be more joyful when they make $10k per month than they raise $1m”

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The African startup ecosystem is rapidly evolving. This rapid evolution is due to a new generation of tech-savvy youths who have increased the digital population of the continent and the adoption of many new technologies by startups.

This evolution has also led to rapid growth of the sector, with many startups solving real problems sprouting all over Africa. According to Statista, 576 fintech startups had their headquarters in Africa as of July 2021.

Venture funding is a major driver and a result of this growth. This area has also seen a remarkable explosion in 2021. In 2021, tech startups on the continent raised $4.6 Billion. This amount is higher than what was raised in 2020 ($1.7billion), 2019 ($1.3billion) and 2018 ($800m) together ($3.8billion).

Mega rounds in Africa became very common in 2021, with at least 10 companies raising $100 million or more during the year. These include Nigeria’s Opay and Flutterwave, Andela and Trade Depot, South Africa’s JUMO and TymeBank and MFS Africa, Kenya’s Chipper Cash, Senegal’s Wave, and Egypt’s MNTHalan. The complete list is below.

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The African startup ecosystem is rapidly evolving. This rapid evolution is due to a new generation of tech-savvy youths who have increased the digital population of the continent and the adoption of many new technologies by startups.

This evolution has also led to rapid growth of the sector, with many startups solving real problems sprouting all over Africa. According to Statista, 576 fintech startups had their headquarters in Africa as of July 2021.

Venture funding is a major driver and a result of this growth. This area has also seen a remarkable explosion in 2021. In 2021, tech startups on the continent raised $4.6 Billion. This amount is higher than what was raised in 2020 ($1.7billion), 2019 ($1.3billion) and 2018 ($800m) together ($3.8billion).

Mega rounds in Africa became very common in 2021, with at least 10 companies raising $100 million or more during the year. These include Nigeria’s Opay and Flutterwave, Andela and Trade Depot, South Africa’s JUMO and TymeBank and MFS Africa, Kenya’s Chipper Cash, Senegal’s Wave, and Egypt’s MNTHalan. The complete list is below.

This is a great development in the space. However, Venture Builder at Catalyst Fund Maxime Bayen and Founder of The Big Deal Maxime Bayen believe that this is an even greater prospect.

The African venture expert spoke to me via video and said that he was excited about the increasing number of startups attracted VC funds. This is one of the best indicators of the health of an ecosystem. He said that large, early-stage startups are a guarantee of an ecosystem’s longevity.

If you want to know how many unicorns Africa will have over the next 10 years, take a look at the number pre-seed businesses we have this year. It’s more exciting to see many pre-seeds. These big companies are already there. Maxime stated that if there aren’t many companies at the seed and pre-seed stage, then it is not a great future.

2021 is a great year for VC funding but not for female-founded startups

2021 was the year that Africa saw a surge in venture capitalist funding. The continent saw nearly triple the amount of venture capital funding. However, funding rounds came thick and fast. They were well distributed across the various stages of startup growth.

In addition, there were more investors in Africa last year than ever before. They include both angel and institutional investors. The number of African venture capitalists and investors reinvesting in their home countries is also on the rise. According to reports, around 800 investors signed cheques to African startups by 2021. This gave them access to a variety of funding sources.

Maxime Bayen spoke out about the remarkable aspects of Africa’s venture funding for 2021. He pointed out the extraordinary amount of capital that was invested in Africa.

The total number is very large. In 2021, there will be more than $4.3 billion raised by African startups. This is nearly 2.5 times the amount that was raised in 2020. It’s amazing that, despite some very large deals, there are still many smaller deals. In 2021, we have 820 deals totaling more than $100,000. He said that this creates a strong pyramid, where the vast majority of fundings is pre-seed or seed deals. This is very good for the future.”

Another striking aspect of the 2021 funding story is the phenomenal growth rate on the continent. African startups raised $4.3 billion in 2021, a staggering 150% increase over the $1.7 billion they raised in 2020.

According to CB Insights State of Venture 2021, $621 billion was raised by tech startups around the world. This is an 111% increase in Year-on-Year funding from $294 billion in 2020. Although it might seem like Africa’s $4.3billion is just a drop in the ocean, Africa’s 150% annual growth rate outweighs global growth.

Despite the many positives, there are also some less impressive facts. The first is that the vast majority of funding continues to go to four African markets, with Nigeria, Egypt, South Africa and Kenya each receiving more than 80% of total funding ($3.5 billion).

Although some startups hailing from smaller countries, such as Wave from Senegal or Al Soug, from Sudan, made big statements, it was not enough to address the uneven funding distribution on the continent.

The biggest problem is the large disparity in funding for male-founded startups and female-founded ones. A Briter Bridges report shows that only 3 percent of African tech startup funding has been given to companies founded by all-female founders, while 76% have gone to all-male founding businesses.

In 2020, 84% went to startups that had all-male founders. This number dropped to 82% in 2021, but it wasn’t much different for all-female-founded startups. Maxime was not happy with this.

“In 2021, 82% of total funding was raised by startups founded by men. This is definitely not balanced. There has not been a single female-founded startup that has raised more than $6million. While there are some female-led startups that have received significant funding, these companies still have to have male co-founders. This is not a problem that’s unique to Africa but it does need to be addressed. He said that we need to change it.

It’s interesting to note that only 2.8% of global venture capital funding goes to women-led startups according to a study by Women who are tech.

Resilient ecosystem

It’s not news anymore that the global Covid-19 pandemic caused major disruptions to the global tech industry. This had a huge impact on funding in Africa, particularly in 2020.

Although startups across the continent raised $1.7 billion in 2019, it was a small increase from the $1.3 billion raised in 2019. The pandemic may also have contributed to the large amount of venture funding realized in 2021. Most of the funding originally planned for 2020 was moved forward due to the pandemic.

Maxime believes that the pandemic had many positive effects on the African tech ecosystem. Most important is the resilience of the ecosystem to crises.

“The pandemic has demonstrated that the ecosystem can withstand crisis. Many of the startups that raised funding this year have solved important problems that affect millions of people. These things won’t disappear if your startup provides access to finance, food, healthcare, education, and financial services. These things will continue to exist even if there is a pandemic. He said that the ecosystem is resilient because of this.

What should startups do to celebrate a successful fundraise?

It should be an experience of joy to help a startup raise funds. Shouldn’t it? It is happening in Africa. There has been much debate about whether startups should rejoice or celebrate when they receive funding.

Others believe they should celebrate it as a validation of years of hardwork. Funding is not just recognition. It also represents trust. Investors aren’t just investing money; they are also investing trust in a team and their dream.

However, those on the other end of the divide remind everyone that the money investors give is not a reward for years and hard work, but an invitation to do more. These people say that funding does not guarantee success.

Maxime believes that it is ok to celebrate after completing funding rounds. Maxime believes startups should be more happy when they reach their first major revenue milestone, as that is a stronger indicator of a business’s health.

“Internally, in the startup, you should be more happy when you achieve your first $10,000 GMV. This is because your customers will likely be your first investors. It’s great if you can scale quickly and without raising any money. It’s possible for companies to scale up without raising capital, and that’s great.

Maxime Bayen

However, he explained that funding is good news as it indicates that the ecosystem is improving and is growing. External observers cannot see the milestones of the ecosystem and can only assess startups with funding deals. They cannot see the GMV, EBITDA or other financial metrics. Funding is a success metric for startups.

“Just because a startup raised a million dollars doesn’t necessarily mean that they are a great startup. It’s the closest proxy that we have to that. This does not mean that all investors have access to financials. They have looked at the documents in detail, spoken to the team, and done their due diligence. He said that he was happy to invest in the company.

He also highlighted the importance of funding raising. While the most successful players in global tech may raise large sums, and it might seem impossible to the beginning African tech entrepreneur, the impact of a UniLag founder raising huge funds will hit closer to home, as there is always someone who has known him directly or indirectly.

Looking ahead to 2022, and advice for early-stage startups

Indeed, the African tech sector has come a long ways. The space had its most successful year in terms funding in 2021. It is our hope that this momentum continues in 2022.

The new year has picked up right where the previous year left off. Different startups have already announced impressive deals for the new year. South Africa’s Poa has already raised a staggering $28 million through Series C.

Another startup that has raised funding this year is Float, a Ghanaian fintech company. It raised $17M seed funding. Lipa Later, a Kenyan fintech company, raised $12Mn. SeamlessHR, Nigeria, raised $10M series A. Orda, Nigeria, raised $1.1M preseed. Pivo, a Pivo, received funding from Microtraction, an undistribut.

Maxime believes that the early signs are positive and will continue to improve.

“The early signs of good are not only that there have been a lot of deals signed in January, but also that there have been a lot of funds that were closed at the close of last year. These funds will be deployed in the next year and 2022. He stated that there is a lot of money available to deploy this year on paper.

Venture capitalists are looking to expand their portfolio by investing in more African startups. It is crucial that startups remain open to any opportunity.

Maxime acknowledges that getting funding can be difficult and takes time. However, he believes that startups need to anticipate problems and improve their solutions. Maxime also recommended that startups do due diligence on venture capital firms to ensure they aren’t entangled with unfavorable investors.

“Do your homework. If you don’t know what you are doing, it is not worth reaching out to Partech. They won’t sign your cheque right away. Once you have identified the right investors for you, it is possible to check out which startups they invested in and talk to them about whether they are good enough to help you deliver the value you desire. He said that you should do your research to ensure you are able to say no to investors and to look for the best.

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